Table of Contents

Handbook of Research on International Strategic Management

Handbook of Research on International Strategic Management

Elgar original reference

Edited by Alain Verbeke and Hemant Merchant

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.

Chapter 10: Joint venture configurations in big emerging markets

Hemant Merchant

Subjects: business and management, international business, strategic management

Extract

Empirical studies investigating capital markets’ reactions to announcements of corporate participation in international joint ventures (IJVs) have usually focused on firm-specific factors – often without agreement about the impact of these factors on parents’ shareholder value (Gulati, 1998). Rarely have studies included location-specific factors to explain shareholder value creation via IJVs. This is a crucial omission because the two sets of factors are interconnected and thus jointly influence firms’ economic performance. One implication of this jointness is that while the efficacy of firm-specific advantages depends upon characteristics of the host country in which these advantages are deployed (Dunning, 1998), host country factors may offset certain firm-specific disadvantages (Makino and Delios, 1996). Although recent studies have investigated the contingency effects of home and host country locations on firm-specific advantages held by multinational firms (Erramilli et al., 1997), neither these nor previous joint venture studies have explicitly identified compensatory effects among firm-and location-specific factors. Moreover, no study has directly investigated the performance implications of such complementarities for firms. This study attempts to fill the noted gaps in the context of IJVs located in big emerging markets (BEMs). The issue of how firm-specific and location-specific factors interact empirically can be well scrutinized in the above-mentioned context. This is because every BEM portrays a distinct set of location-specific conditions (Garten, 1996). Moreover, most BEMs are developing countries, where more than 60 percent of managers seem dissatisfied with their firms’ joint venture performance (Beamish, 1985).

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